Know What You Outsource
Carlton Hoyt
Something that we do here at BioBM is help clients strategically outsource; to improve and expand their capabilities and / or to help reduce costs. We’re not politicians and outsourcing isn’t a dirty word here. Our clients, small life science tools companies, can’t be expected to have all the capabilities that they might need in-house. Outsourcing is a way to fill that need.
Low-cost outsourcing is an attractive prospect in many cases. You can often source a service for a small fraction of the cost to do it in-house or use a higher-cost, more reputable agency. However, in order for low-cost outsourcing to be successful, you need to have an understanding of what you’re outsourcing.
We sometimes have companies come to us after they have attempted to outsource a project or function to a low-cost provider. For the sake of illustrating the point, we’ll use one of the more common examples: website design and development. Companies looking to save a few thousand dollars often look to companies in low-income areas that offer to build websites for as little as a few hundred USD. While there are certainly times where such companies get lucky, often it ends up being a waste of time and money. Why is that?
Quite simply, these companies did not have a good enough understanding of web design and development to effectively outsource it to a low-cost provider. They may not understand the technical aspects of the projects, the nature of the work involved, or even how to properly define their needs and requirements. This leads to poor communication, poorly defined scopes, and ultimately a poor deliverable. If they had a better understanding of website design and development, they would be more able to effectively manage their contractor and would be unlikely to encounter such problems.
(Just for the record, we do not outsource web design / development. We do outsource some lower-level but time consuming tasks in order to keep down our own costs and therefore the costs to our clients. We can be successful in doing so we not only understand outsourcing, but have a keen understanding of the projects that we outsource.)
If you have a good understanding of the task that you need performed, you can probably make use of low-cost outsourcing. However, if the work contains a degree of ambiguity to you, it is probably best that you choose a reputable, well-established service provider who will work closely with you to fulfill your needs.
Taking a pragmatic view on the state of the economy, it’s fairly easy to see that the road to recovery will very likely be a long one. Governments are in huge amounts of debt, and the “great recession” has been especially hard on small businesses, yet we see the stock markets going back up; the Dow is almost to 11,100 as I write this. Why do things feel so bad but look so good for big businesses? A lot of it isn’t due to revenue growth – global demand is still anemic. A lot of it is due to cost cutting to improve bottom lines which have left many large companies with very positive balance sheets. Now, having likely seen the worst of the recession and being in a strong financial position, large companies are starting to reinvest in anticipation of future demand growth.